1995 (3) TMI 225 - AT - Central Excise

Exemption from payment of duty on iron or steel products if manufactured out of duty paid raw materials

Summary

Issues:
Claim for exemption under Notification No. 206/63 - Requirement of duty paying documents - Interpretation of relevant judgments.

Detailed Analysis:

1. Claim for Exemption under Notification No. 206/63:
The appeal arose from an order-in-appeal confirming the denial of the benefit of Notification No. 206/63 by the Collector (Appeals) in relation to iron or steel products falling under Tariff Item 26AA(ia). The issue revolved around the requirement of producing duty paying documents for claiming exemption under the notification. The Assistant Collector granted partial benefit based on produced documents but denied it for the quantity where documents were lacking. The appellant contended that no proof of duty payment was necessary as steel wires were drawn from steel wire rods obtained from various sources. They argued that the duty payment obligation rested with the suppliers of the raw materials. The authorities disagreed with this interpretation, leading to the appeal.

2. Interpretation of Relevant Judgments:
The appellant cited several judgments to support their claim, including Sulekh Ram & Sons, Ganga Steel Rerolling Mills, Capital Dyeing Co., and others. These judgments emphasized that goods procured from the market were deemed duty paid unless proven otherwise by the department. The courts highlighted that the duty payment responsibility lay with the manufacturers of raw materials, relieving purchasers of the burden to verify duty payments. The judgments clarified that the wording "has been paid" in notifications did not require actual payment but implied the duty ought to have been paid. The Tribunal and various High Courts had consistently upheld this principle in different contexts, reinforcing the notion that goods purchased from the market were presumed to be duty paid.

3. Decision and Conclusion:
After considering the submissions and the cited judgments, the Tribunal concluded that the raw materials received by the appellants from steel manufacturers were deemed duty paid unless proven otherwise by the department. As the department failed to demonstrate any non-payment of duty in this case, the Tribunal allowed the appeal by setting aside the impugned order. The decision aligned with the consistent judicial interpretation that purchasers could presume duty payment on goods procured from the market unless evidence suggested otherwise. This ruling clarified the application of Notification No. 206/63 and affirmed the principle that duty payment responsibility primarily rested with manufacturers, not purchasers.